Making tax work for women’s rights

Students Abigail (R) and Purity (L) in class in West Pokot, Kenya. The school has been supported by ActionAid.

Photo: Ashley Hamer/ActionAid

Let’s talk about tax, baby…

Tax, it’s a dull subject, right? Technical, full of figures, decided upon by grey men in grey suits in grey offices, far from the reality of people’s daily lives. If this is your perception (and you’re not alone if so), it may have escaped your notice that tax and women’s rights are entwined. For an organisation like ActionAid, though, it’s pretty important that we pay close attention to this fact, because when tax is not paid by big corporations and the wealthy, its poor women that stand to lose out the most - through the absence of vital public services.

How tax is both spent and raised matters more for women than men because of gender inequality: globally a greater proportion of poor people are women and the distribution of unpaid care work is highly unequal. ActionAid’s new briefing Making tax work for women’s rights looks at some of the ways in which tax revenue that is badly needed in order to achieve Sustainable Development Goal 5 on gender equality is being lost due to tax breaks for corporates and regressive tax systems. It also draws attention to the need for governments to spend tax revenues strategically, on the public services that women need.

There is lots of potential for tax to bring about positive change in women’s lives. At the moment, developing countries give away massive unnecessary corporate tax breaks while services that women need struggle for funding, while at the same time tax could be raised more progressively.

By virtually every global measure women are disadvantaged relative to men. Women do the vast majority of unpaid care work – such as caring for children, the elderly and performing household chores – in all countries. ActionAid research has found that globally women do an average of 23 years more unpaid work than men. Not only that, they are over represented in poorly paid work and one in three will experience violence in their lifetimes.

Governments are responsible for redressing this injustice. It is they who must work to end gender inequality and ensure that women realise their rights. Absolutely key to doing this is to provide good quality public services. In developing countries women’s unpaid care burden and poverty would be dramatically reduced if everyone had access to good healthcare, childcare, education, clean piped water, public transport and electricity. Decent public services are also an essential element of a strategy to prevent and respond to violence. In order to deliver these public services governments’ most significant and sustainable source of revenue is tax.

At the moment many countries are giving away large amounts in corporate tax breaks in a bid to attract investors, despite evidence that tax breaks are largely irrelevant to investment. We have found 15 developing countries which report the value of corporate income tax breaks. Of these countries, 12 forego revenues of more than 0.5 percent of GDP and the total given away by the 15 countries over one year was $48 billion – and that’s likely to be an under estimate. This amount of tax would provide a huge uplift to programmes targeted at women’s rights and empowerment. The data published by nine developing countries on their spending through women’s ministries or agencies shows that it is on average only 0.03 per cent of GDP.

Tax avoidance by multinational companies due to loopholes in the international tax system is another way in which revenue to invest in public services is lost. The IMF has estimated that developing countries lose US$200 billion a year due to multinational tax avoidance - resources which could make a significant difference to public spending on services that women desperately need.

Tax revenues need to be maximised in order that they can be spent on vital public services that will help to end gender inequality. This implies that taxes must be raised progressively; so that the well-off pay a higher proportion of their income in tax than the poor. Given that women make up the greater proportion of poor people, this should have the effect of reducing their economic inequality.

Most developing countries rely heavily on indirect taxes such as VAT and trade taxes - which raise the same rate of tax from people regardless of their income. Developing countries need to work towards raising more tax by means of direct income tax (where the rate of tax goes up with income) or through wealth and property taxes. As gender inequality runs from the bottom to the top of income scales, men are likely to be more heavily represented among those with high incomes. As a result when the rich are not taxed it is mainly men that keep control of those resources.

Governments must find the political will to reject the pressure of foreign and domestic businesses negotiating for tax cuts. Instead they need to put in place progressive direct taxes which will raise the revenues required to deliver public services that women need in order to reduce their unpaid care burden and see the fruits of their labour outside the home as well as in it. And that would be something worth talking about.